The troubled tobacco shop concessions

We haven’t talked about the tobacconist shops lately, although there is quite a bit to be said about them. First and foremost, that as the result of the newly restricted availability and the price hikes black market sales of cigarettes have soared in the last couple of months. Fewer and fewer people are buying cigarettes at the designated stores. The fallout? The loss of 23 billion forints in excise taxes for the treasury. Also, the new owners of these shops, although they turn a 10 percent profit on every pack of cigarettes, are not doing well. One needs to sell an awful lot of cigarettes to make a really good living.  And “only an idiot would buy cigarettes in the tobacconist shop,” reads a headline in today’s Origo. 

The troubles started early, with a spate of tobacconist shop robberies. Petty criminals all over the country, hearing about the fabulous profits that could be made by the owners of these shops, found them irresistible. And since the store fronts must be darkened and the doors kept closed at all times, the robbers could be assured of an easy target.

After a few weeks the black marketeers were in full swing, divvying up territories among themselves. They sell inexpensive cigarettes from Ukraine and Serbia for 500 forints a pack, as opposed to 900 forints in the stores, as well as western brands such as Kent, Marlboro, and Lucky Strike. The supply is plentiful. And it’s a terrific deal for both seller and buyer. The Ukrainian seller turns a 100% profit on each pack of cigarettes and the Hungarian buyer gets the pack for almost half the official price.

A man on Kálmán Széll tér (formerly Moszkva tér) explained how the distribution system works. A “very reliable man” brings him the merchandise from Ukraine. This reliable guy has his “reliable customers,” among them the fellow the Origo reporter talked with. The man admitted that what he does is illegal but, as he said, “the laws are wrong.” The black marketeers divide up the square among themselves, and they “defend their turf as jealously as the prostitutes.” Tobacconist shops nearby are hard hit. There are days when for hours they don’t have a single customer. A fair number of shops have already closed.

Making tobacco a state monopoly was most likely the brainchild of the Hungarian-owned Continental Tobacco Company. The owner of the company is a good friend of János Lázár, who was heavily involved in drafting the law. The Continental Tobacco Company also made sure that its employees and board members received a fair number of concessions through front men (Strohmann/stróman). Of the 4,300 tobacconist shops they got about 500 concessions.

One of the main beneficiaries was András Kulcsár, a top manager at Continental. He got 84 concessions. Now, after a few months, he has already had to close 25. The reason? Most likely a lack of business expertise, bad location, and low sales. The law, by the way, states that stores that close must be reopened within 60 days.

The cronies have all the dough / Photo Index

Today we learned that one of the tobacconist shops that belonged to Tomi Palcsó, a singer discovered on “Megasztár,” has been closed for days. The singer, who is a Fidesz favorite and who often performs at Fidesz events, received five concessions, officially the maximum number. It looks as if business in Csepel didn’t exactly thrive. Mind you, DK demonstrations in front of the Csepel stores over the last couple of weeks probably didn’t help. (László Varju, one of the top DK leaders, has been called into the police station for organizing demonstrations.) Although Palcsó’s store was already defunct, about a dozen DK activists protested in front of it today with signs like “The cronies have all the dough.”

Meanwhile, on popular initiative the National Election Committee gave its blessing to holding a referendum on two questions concerning the tobacconist shops, and the Kúria (formerly the Supreme Court) approved it. If the activists manage to get 200,000 signatures within 45 days the referendum can be held. There will be two questions on the ballot: Do you agree that instead of a 10 percent guaranteed profit, it should be rolled back to the original profit margin of 3.33%? And do you agree that only tobacco products should be sold in the tobacconist shops?

Apparently the Fidesz leadership is furious. As one Fidesz politician told the reporter for Index, “that will not happen again.” At this moment it is not clear whether the government/Fidesz (it really no longer matters what we call it) intends to block such a referendum altogether or whether they only want to prevent its being held before the elections. In either case, I wouldn’t like to be in the shoes of one of the members of the Committee who in the last minute changed his mind on the question of the profit margin and thus made passage of the motion possible.

Együtt 2014-PM’s puzzling message

Opposition politicians are busy rallying the troops. Gordon Bajnai and Tímea Szabó (PM) paid a visit to Óbuda to campaign. Yes, to campaign because, although the campaign will start officially sometime in January, unofficially it has already begun in earnest. Yesterday MSZP held a large gathering in Miskolc where Attila Mesterházy addressed an enthusiastic crowd. And this afternoon several thousand DK supporters gathered on the Freedom Bridge in Budapest where Ferenc Gyurcsány, Ágnes Vadai, and László Varju gave speeches.

Neither the MSZP nor the DK rally was especially newsworthy. Mesterházy made a slew of campaign promises and Gyurcsány repeated his pledge never to make compromises with Viktor Orbán. But Gordon Bajnai made news with his speech in Óbuda. He talked mostly about the mistaken economic policies of the Orbán government and the damage they inflicted on the country. Naturally, he promised a reversal of the Matolcsy-Varga line and a return to economic orthodoxy. However, he said something that puzzles practically everybody. Talking about constitutional issues, he said that “if there is not a two-thirds majority … then we will put to the new opposition a proposal that they will be unable to refuse.” He added that at the moment he doesn’t want to reveal more of his plans.

This mysterious offer conjured up nefarious thoughts in my mind, and it seems that I was not alone because someone from the audience inquired whether this offer will resemble similar offers in The Godfather. A day later the question came up again on Egyenes beszéd during a conversation with Viktor Szigetvári, the co-chair of Együtt 2014, who tried to minimize the significance of this sentence. But, if at all possible, he only further confused the issue. In fact, Szigetvári got himself into a jam by at one point advocating negotiations with Fidesz and a few minutes later saying that “with this Fidesz he certainly wouldn’t be willing to negotiate after a lost election.” But then what?

Together for Hungary? E14-PM belies its name

Like everyone else, Olga Kálmán wanted to find out more about Bajnai’s offer that couldn’t be refused by Viktor Orbán and his party. A fairly long-winded explanation followed. If there is no two-thirds majority then the new government must sit down and negotiate with Fidesz and convince Viktor Orbán to lend his support to “constitutional corrections.” When he was further pressed by the reporter, Szigetvári came up with another idea: holding a new election.  With good governance this second early election could achieve an overwhelming two-thirds majority. Thus the government would have a free hand to “make adjustments” in the constitution and in some of the cardinal laws that need a two-thirds majority to change. But in any case, even with a two-thirds majority “consensus” must be achieved, although he did admit that “with this Fidesz” such consensus is unlikely. He added, in my opinion naively, that if Fidesz refuses to come to an understanding, then it must bear “the historical responsibility” for a failure to set the country on the right track. As if Viktor Orbán cared a hoot about their opinion of the “right track.” He thinks that he is the one who will lead the country to Paradise.

Olga Kálmán was skeptical about “Fidesz suddenly being ready to dismantle the edifice that it built in the last four years.” Szigetvári immediately assured his audience that “not everything has to be undone,” but one must make an attempt at an understanding. If that doesn’t work, then comes the next step: early elections in the hope of the two-thirds majority. But what if the new government parties not only fail to get a two-thirds majority but actually lose the early election? It seemed that such an idea hadn’t occurred to him. He was confident that Együtt 2014-MSZP would win a second election in 2014 or 2015. But after further questions on a possible Fidesz victory at the early election, he no longer insisted and said that “this is only one possibility.” He didn’t elaborate on what the others are.

While Bajnai was in Óbuda, Szigetvári gave a speech at a conference organized by the Republikon Institute headed by former SZDSZ politician Gábor Horn. Here he concentrated on the Együtt 2014-MSZP agreement, praising MSZP and claiming that for the breakdown of negotiations between MSZP and DK Ferenc Gyurcsány was solely responsible. Magyar Nemzet naturally was delighted and joyfully announced that “Gyurcsány is at fault,” the phrase the Fidesz propaganda machine invokes anytime the Orbán government faces an economic difficulty. In fact, Szigetvári went so far as to accuse his former boss of betraying his own party and putting his personal interest above the good of the Demokratikus Koalíció. Magyar Nemzet concluded that there seems to be confusion within the leadership of Együtt 2014 because in Óbuda Bajnai talked about the importance of DK and expressed his hope that it will join the coalition of the two democratic parties while Szigetvári fiercely attacked the former prime minister.

The Együtt 2014-PM-MSZP duo needs to start sending a clear, unified message. Voters are not decoders.

Water and politics: The case of the Roma in Ózd

There are times, though not too often, when Fidesz and the Orbán government retreat and give up positions earlier thought to be sacrosanct. This usually happens when there is a big stink. Not just nationally but internationally. This is what happened with the public faucets in Ózd.

Ózd, a town with a population of 34,000, fell on hard economic times when the heavy metallurgical industry collapsed in the 1990s. Ózdi Kohászatai Üzemek had employed more than 10,000 workers. In 1975 67.3% of the men between the ages of 18 and 65 were gainfully employed. Now the unemployment in Ózd is extremely high. Ózd also has a large Roma population. Officially only 7% of the population declared themselves to be of Roma ethnicity, but according to some estimates one-third of Ózd’s population might be of Gypsy origin.

The Gypsies live in several ghetto-like sections of the town. Most of their houses don’t have running water, so these people must carry  water in buckets from public faucets. Apparently there are 123 faucets that serve about 8,000 people. Some of these people live in areas where city water was never hooked up; others don’t have service because they couldn’t pay their water bill. A family of four or five needs at least 100 liters of water a day and, especially in the areas where a lot of people live without city water, there might be as many as 100 people who use one faucet.

Since the city must provide water to the inhabitants, these people receive their water free of charge. The Fidesz-led town hall found the 13 million forints the city had to pay for the water used on roadsides too high. They claimed that the families living in those parts waste water. They use it for washing cars, watering their gardens, and for the children to splash around in. The city fathers, including the sole MSZP member, voted to restrict access to water at public faucets. They completely closed 28 of the 123 faucets and set the water pressure in another 61 very low to discourage the use of too much water.

There are conflicting claims about how slow these faucets became after the town hired a company to lower the pressure from 100% to 60%. The mayor and other Fidesz officials in town claim that lowering the pressure made little difference. (Then why do it?) One of the city fathers declared that the difference between full pressure and reduced pressure is negligible, but others figured that it now takes at least ten minutes to fill a ten-liter bucket with water. A family of five that needs 100 liters of water a day would have to stand for an hour and a half to fill the requisite number of buckets. The men are not around at this time of the year because they managed to get some seasonal work in agriculture, so it’s mostly women and children who carry these buckets. Ten liters of water is terribly heavy, especially for a skinny eight-year-old whom I saw on one of the photos. And he must make at least ten trips. Sometimes quite far. There are cases where they have to walk at least half a kilometer each way.

The water is barely trickling / Népszabadság photo by István Konyhás

It’s easy to blame everything on the Gypsies, but one of the city fathers admitted that it’s not the inhabitants of the “segregatums,” as one journalist called these Gypsy ghettos, who steal the city’s water but owners of weekend places outside of Ózd. They come by car and take away 200-300 liters of water. In fact, 444.hu received an e-mail from someone who called attention to a 2011 Google Earth video of a hose that led from a city faucet to a well appointed house in one of the wealthiest sections in town. You can see it on YouTube:

http://www.youtube.com/watch?v=P1msthmIB3o

It was inevitable that the decision of the Ózd City Council would become a national issue. Although the city fathers never mentioned the word “Roma” or “Gypsy,” it became a Roma issue. It couldn’t have been otherwise when it is the Roma population’s neighborhood that is without running water and when it is mostly the dirt poor Roma who can’t pay their water bills.

Opposition politicians were on hand, led by István Nyakó (MSZP) who is from these parts. László Varju (DK) arrived as did Aladár Horváth, a Roma activist. There were all sorts of useless negotiations between Nyakó and Pál Fürjes, the Fidesz mayor of Ózd. I don’t know in what language they tried to converse, but the two gave entirely different reports of their conversation. Nyakó understood that Fürjes promised to restore the standard pressure in the faucets while Fürjes claimed that there was no such agreement. Moreover, he made it crystal clear that the city will not move an inch. It is not fair that the majority of the city’s population has to pay for water while others don’t. As he put it, “perhaps the majority of people feel good when they steal, but someone has to pay for the water.” He neglected to mention that these people have no choice because they have no water hook-up.

Fürjes’s claim is especially distasteful in light of the fact that Ózd received 1.75 billion forints from the Swiss-Hungarian Cooperation Program for the express purpose of providing running water to the Roma ghettos. Opposition politician Péter Juhász of Milla and Együtt 2014-PM demanded to know the fate of this money. According to the website of the town of Ózd, work on the modernization of the whole system will be done between 2013 and 2017. Well, more than half of 2013 is gone and there is no sign of any work on the pipes. Fürjes immediately rebuked Juhász, saying that the Ózd Fidesz government is not like the Gyurcsány-Bajnai government which stole the country blind and was corrupt to the core. The money is there and work will begin in November. I must say November’s not the best time of the year to start such a project.

Negotiations between Nyakó and Fürjes led nowhere;  the city was ready to open only one faucet. Nyakó then said that he was going to call on Sándor Pintér, minister of the interior, to force the town of Ózd to restore all the faucets that had served the town’s Roma population.

I must say that yesterday I wasn’t very optimistic that Pintér would intervene, especially after the  Fidesz spokesman Róbert Zsigó threw the party’s weight behind Pál Fürjes. Since yesterday, however, a few things happened that changed the situation.  Zoltán Balog, whose ministry is responsible for Roma integration, announced that he considered limiting water to the Roma ghettos inhumane. Then came the bad publicity from BBC, Deutsche Welle, Der Spiegel, and a very long and detailed article in the Swiss Tages Anzeiger. After all, a lot of Swiss money was given to Ózd specifically for the purpose of making running water available in the Roma ghettos and now the mayor of the town limits water for them even at the roadside faucets!

In any case, Pintér gave a friendly or perhaps not so friendly telephone call to Pál Fürjes, who suddenly saw the light. In order to save face he repeated that the town’s action was entirely legal. But the extended heat wave that hit Hungary after the town council made its decision led him to revoke it. Tages Anzeiger immediately reported the good news. It would be interesting to know whether the Swiss, directly or indirectly, put pressure on the Hungarian government to change its mind on the issue of water supply in Ózd.